Inflation rose to 11.1% in the year to October 2022, but lower-income households experienced a sharper increase in living costs.
The consumer prices index (CPI) annual inflation in October 2022 was 11.9% for households in the second income decile, whereas those in the ninth income decile saw prices rise 10.5%.
The retail prices index, which is no longer an official measure of inflation but is often used by trade unions in pay negotiations, reached 14.2% in the same period.
Rising energy and food costs have more bearing on the inflation rate experienced by low-income households, as a greater proportion of their expenditure is spent on them compared with high-income households, the Office for National Statistics said.
Inflation in October 2022
Inflation to trigger pay rises for 91% of employees
National living wage to rise 9.5% as real wages continue to fall
Wages have failed to keep pace with rising costs. Yesterday the ONS revealed that total pay fell by 2.6% in the year to the last quarter (July to September 2022) when adjusted for inflation. This is despite employees’ total pay and bonuses increasing by 6%.
Data from XpertHR showed that pay settlements remained at their highest level for 30 years in the three months to October 2022 – a median of 4%. This was unchanged on the level seen in the previous six rolling quarters, and almost a quarter of pay awards were set at this level.
Sheila Attwood, XpertHR senior content manager, data and HR insights, said: “The gap between median pay awards and inflation is a continuing challenge for organisations. However not only is there the challenge of high inflation, but tight labour markets and continuing industrial action are pressuring organisations further to find the right balance between employees’ pay expectations and affordability.
“It is likely that affordability will continue to be the driving factor in final pay decisions as economic uncertainty looms at the forefront of many businesses’ concerns.”
CBI lead economist Alpesh Paleja said there were signs that inflation was starting to peak.
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“Global price pressures appear to be easing, and forecasts predict that inflation could fall from double digits to high single digits over the course of 2023,” he said. “Next year’s outlook, however, is clouded by uncertainties: including the extent to which the labour market will loosen, and the status of domestic energy bills support beyond April 2023.”
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